Traders work at New York Stock Exchange in New York, the United States, Jan. 31, 2020. (Xinhua/Wang Ying)
While there's uncertainty about global trade policy, monetary policy effects and others, the US economy could achieve a soft landing in 2020, a senior US Federal Reserve official said Tuesday.
"The current baseline outlook for 2020 suggests a reasonable chance that a soft landing will be achieved," Federal Reserve Bank of St. Louis President James Bullard said in remarks to the CFA Society in St. Louis.
Bullard noted that the Fed was cognizant of the slowing US economy in 2019 and it had provided more accommodation to the economy by dramatically altering the path of monetary policy.
After four rate hikes in 2018, the Fed lowered interest rates three times in 2019, cutting the target range of the federal funds rate by 75 basis points to 1.5-1.75 percent.
Bullard noted that the size of this turnaround in US monetary policy has been much larger than those rate reductions alone would suggest, given that the expectation as of late 2018 was that the Fed would actually raise rates further, not lower rates, in 2019.
"The bottom line is that US monetary policy is considerably more accommodative today than it was as of late 2018," he said.
The Fed official cautioned there are three factors that could affect a soft landing of the US economy. "One question for 2020 is whether global trade policy uncertainty has sufficiently been dampened to now encourage global manufacturing," he said.
"Another question is whether interest-sensitive sectors in the US will respond to the 2019 change in US monetary policy," Bullard said.
Bullard's remarks came after Fed Chairman Jerome Powell told lawmakers earlier Tuesday that the current stance of monetary policy will "likely remain appropriate."
"Of course, policy is not on a preset course. If developments emerge that cause a material reassessment of our outlook, we would respond accordingly," Powell said at a hearing before the House Financial Services Committee, adding the risks to the US economic outlook remain.
After wrapping up its first monetary policy meeting of 2020 in late January, the Fed left interest rates unchanged and maintained a wait-and-see stance.
